SINO SAUDI GAS, a joint venture between China’s Sinopec and Saudi Aramco, will delay drilling in the kingdom’s Empty Quarter as the evaluation of the well is still ongoing, an industry source familiar with the matter says.

The joint venture has been hunting for natural gas for years, but what little they have found has not been exploited due largely to industrial gas prices fixed far below international market prices.

Nevertheless, the two partners will press on with a second phase of exploration, planning to drill one well.

The well was scheduled to be drilled in September but the venture, 80-per cent owned by Sinopec and 20 per cent by Aramco, was evaluating it, the source says but he did not say how long the delay would be.

A Sinopec executive says no decision has been made on the exploration well yet as the company was still evaluating “the economic and technical aspects” of the well. Aramco did not respond immediately to e-mail requests.

Saudi Arabia, which keeps its oil reserves off-limits to foreign companies, invited investors in 2003-2004 to find and produce gas in the Empty Quarter.

But the gas price terms agreed were so low that companies needed to find condensate – a form of light oil that can be sold at international market prices – to cover the costs of development. The joint ventures included Italy’s Eni and Spain’s Repsol which have abandoned the Empty Quarter, industry sources say.

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